G8 leaders agree deal on tax evasion

G8 leaders have agreed new measures to clamp down on money launderers, illegal tax evaders and corporate tax avoiders.

Governments agreed to give each other automatic access to information on their residents’ tax affairs.

They will also require shell companies – often used to exploit tax loopholes and invest money anonymously – to identify their effective owners.

The summit communiqué urged countries to “fight the scourge of tax evasion”.

The measures are designed to combat illegal evasion of taxes, as well as legal tax avoidance by large corporations that make use of loopholes and tax havens.

The summit in Northern Ireland also saw the launch of free trade negotiations between the EU and US, which UK Prime Minister David Cameron, who was hosting the summit, dubbed “the biggest bilateral trade agreement in history”.

Tax, trade and transparency – dubbed “The Three Ts” – were placed at the top of the UK’s agenda for its presidency of the G8, which consists of the UK, US, Germany, France, Italy, Russia, Canada and Japan.

But the summit has been overshadowed by the conflict in Syria.

The G8 leaders – including Russian President Vladimir Putin, an ally of Syrian leader Bashar al-Assad – backed calls for Syrian peace talks to be held in Geneva “as soon as possible”.

David Cameron said the leaders had managed “to overcome fundamental differences”, but no timetable for the Geneva talks was given, and the statement made no mention of what role Bashar al-Assad could play in the future.

Leaders agreed that multinationals should tell all tax authorities about what taxes they pay and where.

“Countries should change rules that let companies shift their profits across borders to avoid taxes,” the communiqué said.

G8 leaders have agreed new measures to clamp down on money launderers, illegal tax evaders and corporate tax avoiders

It follows revelations about the ways in which several major firms – including Apple, Starbucks and Amazon – have minimized their tax bills.

Illegal activities, including tax evasion and money laundering, will be tackled by the automated sharing of tax information.

Ahead of the summit, the Organization for Economic Co-operation and Development (OECD), proposed to share tax information by building on an existing system set up by the US and five major European economies, but on a global scale.

“This international tax tool is going to be a real feature of ensuring that we get proper tax payment and proper tax justice in our world,” said David Cameron, who claimed that it meant “those who want to evade taxes have nowhere to hide”.

The OECD includes all of the G8 members except Russia.

Among the information to be shared will be who actually ultimately benefits from the shadowy shell companies, special purpose companies and trust arrangements often employed by tax evaders and money launderers.

Earlier in the day, Chancellor George Osborne unveiled plans for a UK register of companies and their owners.

The White House also announced a similar plan for the US.

Last week the UK also unveiled a deal with its crown dependencies and overseas territories – including the Channel Islands, Gibraltar and Anguilla – to start sharing more information on which foreign companies bank their profits there.

About a fifth of offshore tax havens, which are used by multinationals to shelter cash from the tax authorities, are British dependencies.

“Of course Britain’s got to put its own house in order,” said George Osborne, adding that the government would launch a consultation on whether the register should be published or just be available to the HMRC.

Speaking during the summit, George Osborne said more progress had been made on reforming the global tax system in the past 24 hours than the “past 24 years”.

The G8 communiqué also demanded more transparency from mining firms.

It follows revelations that many major mining companies use complex ownership structures in the Netherlands and Switzerland to avoid paying taxes on the minerals they extract in developing countries.

“Developing countries should have the information and capacity to collect the taxes owed them,” the communiqué said.

“Other countries have a duty to help them.”

The governments agreed that mining companies should disclose all the payments they make, and that “minerals should not be plundered from conflict zones”.

“We agreed that oil, gas and mining companies should report what they pay to governments, and that governments should publish what they receive, so that natural resources are a blessing and not a curse,” said David Cameron.

The G8 leaders also agreed to stamp out ransom payments to kidnappers for the release of hostages.

David Cameron said tens of millions of dollars in ransom money had been paid around the world in the last three years.

Clyde is a business graduate interested in writing about latest news in politics and business. He enjoys writing and is about to publish his first book. He’s a pet lover and likes to spend time with family. When the time allows he likes to go fishing waiting for the muse to come.

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